SUCRAM PHARMACEUTICALS PVT. LTD.,CHENNAI vs. ITO, NCW-6(4), CHENNAI

The ld. AR Ms. Lekha, CA filed year-wise comparison of the sundry debtors from the last audited balance sheet for AY 2015-16 and argued that the balance outstanding from the debtors has drastically declined from ₹.2,56,62,811/- to ₹.1,78,87,631/- for the reason that the debtors had paid their balances which included a fair amount of cash based on the needs of the assessee. She further argued that out of ₹.77,75,180/- [₹.2,56,62,811 - ₹.1,78,87,631], ₹.23,57,000/- was received in cash and the same has been deposited in the bank during the demonetization period and prayed to delete the addition.

The ld. DR Ms. Gouthami Manivasagam, JCIT vehemently opposed the submissions of the assessee and submits that the assessee could not furnish PAN of any of the sundry debtors either before the Assessing Officer or before the ld. CIT(A) or even before the Tribunal. She further submits that the assessee was required to produce all the parties in person or confirmation with verifiable identity/PAN/books of account or any other reliable supporting evidence to substantiate its claim of source as recovery from debtors to the tune of ₹.23,57,000/-, but, however, the assessee has not only failed to furnish the same, but also, the assessee failed to provide any concrete evidence to prove the recovery from the debtors. The ld. DR pleaded that the addition confirmed by the ld. CIT(A) may be sustained.

Heard both the parties and perused the material available on record. In this case, we note that the assessee could not furnish PAN of the sundry debtors from whom cash deposits received. We note that the Assessing Officer issued notice under section 133(6) of the Act to 21 debtors, out of which, some of the notices returned unserved and some of the addressees denied any such transaction. The Assessing Officer informed the position to the assessee and required to produce all the parties in person or confirmation with verifiable identity/PAN/books of account or any other reliable supporting evidence to substantiate its claim of source as recovery from the debtors to the tune of ₹.23,57,000/-. However, we note that the assessee failed to furnish the same. Since the assessee could not furnish any details before the ld. CIT(A), the ld. CIT(A) dismissed the ground raised by the assessee.

Before us, the ld. AR could not furnish anything as was required by the Assessing Officer. However, the ld. AR furnished year-wise comparison of the sundry debtors from the last audited balance sheet AY 2015-16 and argued that the balance outstanding from the debtors has drastically declined from ₹.2,56,62,811/- as on 31.03.2016 to ₹.1,78,87,631/- as on 31.03.2017 for the reason that the debtors had paid their balances, but no details of mode payment, etc. has been furnished by the ld. AR. It is the claim of the assessee that the assessee company was wound up in the year March, 2017 and if so, there cannot be possibly any business transaction in that mentioned period. Payment of debt by itself is a transaction through financial in nature, which need to be recorded in the ledger account. Therefore, if any person denies to have made any transaction with the assessee in FY 2016-17, it means and includes that no transaction of purchase or sale or payments were made during the said FY. In the absence of ledger account copy of the assessee or any concrete material evidence, we find no merit in the arguments of the ld. AR. In the absence of confirmation of the source for the cash deposits made by the assessee, the addition made by the Assessing Officer under section 69 of the Act and confirmed by the ld. CIT(A) stands sustained and thus, the ground raised by the assessee is dismissed.

Ground No. 3 raised by the assessee relates to confirmation of disallowance of cash amounts under section 69 of the Act received from scrap sales to the tune of ₹.1,15,000/-. As per balance sheet, the Assessing Officer noted the opening balance was ₹.43,638/- and the assessee has not produced any proof for the cash balance of ₹.1,15,000/- and sources for the same. Considering the OD account at Indian Bank with debit balance and very low opening balance as per books of account, the Assessing Officer did not accept the said claim of the assessee. In the absence of cash book for FY 2016-17 and the assessee failed to prove with any concrete evidence and document, the Assessing Officer disallowed ₹.1,15,000/- as unexplained money under section 69 of the Act. The ld. CIT(A) confirmed the above addition made by the Assessing Officer.

The ld. AR submits that the cash in hand as to ₹.1,15,000/- declared by the assessee during the assessment proceedings were a mere amount received from the sale of scrap items which comprises of used AC, furniture and fittings and other such items before the property was sold. She submits that these amounts were duly deposited in the bank as and when received. Upon perusal of the impugned order as well as assessment order, we do not find such declaration of the assessee that the said amount was received from the sale of scrap. In the absence of any evidence produced by the assessee, the addition made by the Assessing Officer under section 69 of the Act and confirmed by the ld. CIT(A) stands sustained. Thus, the ground raised by the assessee is dismissed.

In the result, the appeal filed by the assessee is dismissed. Order pronounced on 22nd August, 2025 at Chennai.